Australian business invoice payment times improve - report

9th December 2015

For a business in any industry to grow and develop, a key element is cashflow. Without the resources to invest in staff or new products on the market, enterprises can quickly lose pace with the competition - a momentum shift that can be hard to peg back.

Cashflow encompasses a number of business functions, but one of the most important relates to invoice payments. Once your enterprise has delivered a certain product to your customer, you'd expect the bill settled in a timely fashion.

However, according to the latest results from Dun & Bradstreet, this isn't always the case across the country, despite recent improvements.

Invoice payment time dropped in Q3.

Payment times drop in Q3

In its Q3 Trade Payments Analysis, Dun & Bradstreet revealed that the average Australian business paid its invoice every 45.1 days during the previous quarter. This is a stark improvement from the 51.7 days recorded in Q3 2014 and 49.2 days noted in Q2 2015.

Economics Advisor to Dun & Bradstreet Stephen Koukoulas explained why the results dropped so much during this period.

"The spectacular decline in average invoice payment times since the middle of 2014 suggests firms are experiencing favourable cash flows," he said.

"A combination of savings from record low interest rates, reasonable income growth and on-going economic expansion mean that firms are well placed to pay their bills more quickly than at any time in many years."

However, for all the positives, 34 per cent of invoices are still paid outside the prompt time period (within 30 days). In fact, across many industries, including utilities, finance, retail, wholesale and construction, most payments are settled well after the 40-day mark.

Business spending improves again

Invoices will be on the mind of many business leaders this month, with the latest Commonwealth Bank Business Sales Indicator revealing that economy-wide spending is on the rise for another month.

"Australian businesses have reasons for optimism ahead of Christmas."

The indicator noted a third consecutive rise of 0.6 per cent in October, with annual growth of spending also holding firm at 7.5 per cent.

Chief Economist at CommSec Craig James maintained there is plenty of Christmas cheer in the air.